Category: Healthcare

While national attention has focused on the Malloy administration’s inappropriate relationship with the insurance industry and the merger of CIGNA and Anthem, few in Connecticut are fully aware that Malloy’s disastrous budget and regulatory policies are leading to the demise of Connecticut’s historic system of regional hospitals and hospitals that are owned and operated by nonprofit entities based in Connecticut.

Instead of protecting these important community and health assets, Governor Malloy and his administration – with the support of the Connecticut legislature – have undermined Connecticut’s hospitals and set up a system in which these vital institutions are being turned over to out-of-state, for-profit entities that see Connecticut’s citizens as simply an opportunity to make a buck at the expense of our health and our communities.

Few, except for the Connecticut Citizen Action Group (CCAG), have been stepping up to fight Malloy’s destructive policies. Among those dedicated to the “get-along-to-go-along” approach to politics and governance has been Attorney General George Jepsen who should have been fighting Malloy on his outrageous anti-local hospital policies.

But news that the State of Connecticut had given final approval to the destruction of Eastern Connecticut Health Network (ECHN), including Rockville and Manchester hospitals, came earlier this month and now comes the reporting on the state’s approval of the plan to undermine healthcare in the greater Waterbury area.

State regulators have decided not to require an independent ombudsman as a condition for approving the $105 million sale of Eastern Connecticut Health Network to a California for-profit company.

That was the only major change announced Friday in the final decision by the state Office of Health Care Access and Attorney General George Jepsen ratifying ECHN’s purchase by Prospect Medical Holdings Inc.

The ombudsman had been one of the most important conditions for many area residents.

State regulators agreed instead to allow for two new members selected from the community, with full voting privileges, to sit on an oversight board that includes local doctors, health care workers, and ECHN managers.

State officials expect the sale to be finalized by the end of July, when ECHN would become known as Prospect ECHN Inc.

[…]

During two days of public hearings last month in both Manchester and Vernon, residents called for appointment of an independent ombudsman to an oversight committee to ensure the communities’ interests are served.

OHCA included that request in the draft decision, but the wording was changed in the final decision released Friday.

Rather than an ex-officio, non-voting member, the two new “community representatives” will have voting privileges and be selected in consultation with the mayors of both Manchester and Vernon.

[…]

Prospect plans to implement its “Coordinated Regional Care” model here, using a preferred provider network focused on preventive care and early readmission to reduce emergency visits.

Prospect officials said Friday afternoon that they were still reviewing the final decision and had no immediate comment. Nevertheless, they said, they hope to finalize the sale soon.

The private company owns 13 hospitals, including seven in California, four in Texas, and two in Rhode Island. It also plans to buy Waterbury Hospital as well as acute-care facilities in New Jersey and Pennsylvania.

In California, where Prospect is headquartered, that state’s patient advocate has rated many of its programs and services as “poor.”

In addition, two of its southern California hospitals in Los Angeles and Culver City are facing federal sanctions because of an “immediate jeopardy” status for unsanitary conditions that caused a surgery to be closed for eight days in order to be properly cleaned and pass inspection.

The company is also facing a labor battle with its nurses and other health care workers in Rhode Island, where contracts are about to expire.

The state Public Health Department’s Office of Health Care Access, or OHCA, and the state attorney general’s office late Friday both released their proposed final decisions to approve the health network’s Certificate of Need application, issuing several conditions.

Conditions that California-based Prospect must meet include: reporting to state regulators any changes to patient care or services in the next three years; submitting a health and community needs assessment plan; maintaining current charity and indigent care; hold a semi-annual joint meeting of the board of directors that’s open to the public; designate a voting board member position for a community representative appointed by the mayor; submit a three-year service plan for any consolidation, reduction, or elimination of services; and submit a semi-annual report to state regulators showing how funds are spent on capital improvements.

[…]

For-profit Prospect Medical is also in the process of purchasing nonprofit Eastern Connecticut Health Network, including Manchester Memorial and Rockville General hospitals, for $105 million, with plans to spend $75 million in capital improvements on those facilities over the next five years.

Prospect now owns 13 hospitals in California, Texas, and Rhode Island. It is also seeking to purchase acute care facilities in New Jersey and Pennsylvania.

September 2015: Less than two months after signing into law a new state budget that raised taxes and cut spending, a state budget that Governor Dannel Malloy claimed was balanced and would maintain the state’s vital services, came the news that a massive budget deficit was opening up for this fiscal year and would be even bigger in the next fiscal year.

In response, Governor Malloy announced a series of emergency budget cuts, the largest aimed at Connecticut’s hospital. Malloy proposed cutting reimbursements to hospitals by another $240 million over the two year period.

The state funding is provided to help hospitals pay for the care they provide to poor and uninsured patients, including those who use the federal government’s Medicaid program.

In response, the Connecticut Hospital Association wrote;

“We are outraged that the Governor would slash Medicaid funding that is desperately needed to care for the most vulnerable people in our state. With nearly one in five Connecticut residents on Medicaid, withdrawing even more funding from the state’s obligation is outrageous. It puts a tremendous additional strain on healthcare providers, who already provide services with reimbursement that is nowhere near the actual cost of delivering that care.”

“Sweeping cuts to this vital program will hurt patients and their communities, and further cripple our state’s economy.”

December 4, 2015: When the Connecticut General Assembly meets next week to adopt a budget deficit mitigation plan designed to close the projected state budget deficit – a budget deal that remains secret – it is widely expected that a portion of the cuts to Connecticut’s hospitals will be restored.

So what is the real situation about hospital funding in Connecticut?

The story itself provides an extraordinary glimpse about how Governor Malloy and the Connecticut General Assembly have used budget gimmicks to hide tax increases, while making state budgets appear balanced.

In this case the tactic goes back to a new taxing scheme that Governor Dannel Malloy proposed and the legislature adopted in 2012.

At the time, the initiative was designed to maximize the amount of Medicaid funding the State of Connecticut received from the federal government. As part of the plan, a small amount of the extra funding would be used to provide hospitals with additional state aid while the majority of the new federal funds would be used to balance Connecticut’s General Fund budget.

The Hospital Provider Tax:

In summary, a new hospital tax was added to hospital bills in 2012. Called a “provider tax,” hospitals were required to tax their revenue which, in turn, provided the State of Connecticut with about $350 million in new taxes.

The state then reimbursed the hospitals the $350 million along with an additional $50 million to help offset the growing cost of treating poor and uninsured patients.

Since the state of Connecticut could then report to the federal government that it had “increased” it’s overall Medicaid spending for the poor and uninsured by $400 million, the federal government increased its reimbursement to Connecticut by $200 million. [As one of the nation’s wealthier states, Connecticut gets a 50% reimbursement for its Medicaid spending – meaning that for every $100 million Connecticut spends on healthcare for the poor, Washington sends the state a check for $50 million.]

In the first year of the program, the state of Connecticut took the $200 million in additional funding it received from the federal government and used $50 million of that money to pay for the increased aid to hospitals and used the remaining $150 million to balance its General Fund budget.

But by the second year, Malloy and the legislature began to change the program.

Not only did the State of Connecticut start keeping all of the “new” federal reimbursement for itself – to balance the budget – but it also stopped returning an ever larger share of the underlying “tax” money to the hospitals.

In year 2, the hospitals still paid in $350 million to the state of Connecticut, but now they ended up getting back $27 million less than they actually paid in. Malloy and the legislature grabbed a total of $188 million to balance the budget.

The state’s bait and switch got worse as time went on.

Hospital Tax

State Aid to Hospitals

Hospital Tax Money used to balance state budget

2012

$349,100,000

$399,500,000

($50,400,000)

2013

$349,100,000

$322,800,000

$26,300,000

2014

$349,100,000

$214,800,000

$134,300,000

2015

$349,100,000

$80,600,000

$268,500,000

2016

$556,100,000

$60,275,000*

$495,825,000

*Data from the Office of Fiscal Analysis via CT Mirror

As the chart (above) reveals, in addition to keeping any and all of the “extra” federal funding that Connecticut collected, the state continued to skim off more and more of the actual hospital provider tax revenue.

Making the situation even worse, since the state was no longer using the hospital tax money to pay for healthcare for the poor, the amount of federal reimbursement dropped.

“But that also meant Connecticut’s take from Washington dropped over the same period – despite rising Medicaid reimbursement rates. The state would have collected an extra $330 million in federal money over the past three years had it not scaled back this arrangement with hospitals.”

In then in September 2015, Malloy announced he was grabbing almost all of the remaining money to balance Connecticut’s growing budget deficit.

In September, Malloy announced plans to rescind three-quarters of the money hospitals were expecting to receive back from the tax this year, as well as three-quarters of the funding for a pool of money for six small, independent hospitals.

Instead of maximizing federal funding and doing a better job compensating hospitals for the care they provide to the poor and uninsured, Malloy and the legislature have created a program that doesn’t maximize federal funds and strips hospitals of the money they need.

And now, every week, we hear more and more bad news about staff being laid off, programs being curtailed and small hospitals being gobbled up by big hospitals.

It is fair to say that no governor (and legislature) have done as much damage to Connecticut’s system of comprehensive hospitals…Hospitals that serve as the health and economic anchor for many communities.

As recently reported in the Connecticut media, the Malloy administration is developing a new “State innovation Model (SIM) that would negatively impact the availability of care for hundreds of thousands of Connecticut residents. Education and Democracy Party candidate for governor, Jonathan Pelto is calling on the Malloy Administration to halt their plans to implement this flawed healthcare payment and delivery model.

“Yet again, the Malloy administration is playing games with the healthcare of Connecticut residents” Pelto said. “Working behind closed doors and without proper public and legislative review, the Malloy administration is attempting to roll out a new, and untested, State Innovation Model (SIM) that could adversely impact thousands of unsuspecting Connecticut citizens and the healthcare providers who treat them. The Malloy Administration’s new plan is nothing short of a return to the failed ‘managed Medicaid system’ that was tried and rejected because it hurt some of Connecticut’s most vulnerable residents and cost the state more rather than saving taxpayers’ money.”

The SIM plan seeks to cut costs by attempting to limit unnecessary tests and other forms of “over-treatment.” Advocates for low-income residents have said that this type of extraneous testing and treatment might be a concern for people with private insurance, but people on Medicaid often struggle to receive even limited access to specialists and general care.

Healthcare advocacy organizations also have expressed also concerns about the fact that the proposed Medicaid changes were so rushed to meet the federal grant deadline that they have not been adequately were developed so recently that they haven’t been properly evaluated and have called for additional study before being used for 200,000 Connecticut residents.

“We are in an era of unprecedented changes in our health care system, instead of rushing to sneak in something that will clearly jeopardize access to the care people needs and deserve, the Malloy administration should stop playing games, put a halt to the new State innovation Model (SIM), and ensure that citizens, advocates and the legislature play a more active role in reviewing and modifying this plan before it is put into place,” Pelto concluded.

For decades, even centuries, Connecticut’s regional non-profit hospitals have been one of its greatest assets. Emergency rooms, maternity programs, and access to local, high-quality hospital care have made our communities better, safer and healthier places to live and raise a family.

While improvements to the quality of care and the reduction of hospital medical errors have become a major concern across the nation, the notion of local, non-profit, comprehensive hospitals are the healthcare and economic backbone of many Connecticut communities.

But Governor Dannel “Dan” Malloy’s unprecedented cuts to Connecticut’s non-profit hospitals and his outrageous support for the for-profit hospital industry is already leading to the worst possible outcome.

The truth is that over the past two years, the Malloy administration has cut hospital funding by over $400 million and these cuts have led to layoffs and reduced services at numerous Connecticut hospitals.

The cuts have also left a number of smaller hospitals teetering on the edge of bankruptcy.

But worst of all, while undermining the funding of Connecticut’s non-profit hospitals, Malloy has also quietly opened the door and ushered in the for-profit hospital industry to our state.

Take the dire fiscal problems facing many hospitals, introduce the “profit motive,” and we’ll now be seeing the type of healthcare system that Malloy’s policies have created.

As recently reported by Connecticut media outlets, the for-profit Tenet Healthcare Corporation is already moving to purchase St. Mary’s Hospital in Waterbury, as well as, Waterbury’s other hospital. Those of us in Eastern Connecticut know that Tenet is also making a play for hospitals east of the river.

For those who don’t know, Tenet Healthcare Corporation is the $12 billion national hospital operator that employs over 100,000 people and brags that they are, “a leading healthcare services company, through its subsidiaries operates 79 hospitals, 193 outpatient centers and Conifer Health Solutions, a leader in business process solutions for healthcare providers serving more than 700 hospital and other clients nationwide.”

As Tenant arrives in Connecticut, residents should be aware of the following information provided by Wikipedia,

In 2003, Tenet sold or closed 14 hospitals and closed more than 20 facilities in 2004 to achieve its financial performance goals. Also in 2004, Tenet also moved its headquarters from Santa Barbara, CA to Dallas, TX.

In June 2006, Tenet agreed to pay $725 million in cash and give up $175 million in Medicare payments for a total of $900 million in fees to resolve claims it defrauded the federal government for over-billing Medicare claims.

In 2007, Tenet appointed former Florida governor Jeb Bush to its board of directors to improve its reputation.

In December 2011, the non-partisan organization Public Campaign criticized Tenet Healthcare for spending $3.43 million on lobbying and not paying any taxes during 2008-2010, instead getting $48 million in tax rebates, despite making a profit of $415 million, and increasing executive pay by 19% to $24 million in 2010 for its top 5 executives.

In April 2012, Tenet agreed to pay $42.75 million to resolve allegations that it improperly billed Medicare between 2005 and 2007.

St. Mary’s Hospital in Waterbury announced plans Tuesday to be acquired by Dallas-based Tenet Healthcare Corporation, a national for-profit hospital chain that’s already in the process of purchasing hospitals in Bristol, Vernon, Manchester and Waterbury.

St. Mary’s had been considering corporate suitors for several years. A previous deal to join forces with a different for-profit company and Waterbury Hospital fell apart two years ago over concerns about providing reproductive services and the rules St. Mary’s operates under as a Catholic hospital.

Although Tenet is also in the process of acquiring Waterbury Hospital, the deal announced Tuesday would leave each hospital in the city separate. Both would convert from nonprofit to for-profit.

So the when it comes to Connecticut’s hospitals, Malloy’s legacy is (1) record cuts and (2) making it easier for for-profit hospital chains to gobble up Connecticut’s hospitals.

Hardly the policies that Connecticut needs or deserves.

And why would Malloy push such detrimental policies on Connecticut?

One need only check out the Tenant Healthcare Corporation’s “corporate policies” which include the following:

We believe that it is important to participate in political, legislative and regulatory processes on issues that affect Tenet’s business and community interests, and are committed to doing so in a way that is consistent with our values, our legal obligations, and our Standards of Conduct…

At the end of May, Governor Dannel “Dan” Malloy stunned healthcare advocates when he vetoed an important bill that would have required insurance companies to provide data about how much substance abuse coverage and related mental health care they are actually providing Connecticut residents.

The legislation was a product of a major study conducted the Connecticut General Assembly’s bi-partisan Program Review and Investigation Committee. While insurance companies already report some utilization data, the Committee’s investigation determined that companies were not providing the information necessary for policymakers to determine whether patients were getting the substance abuse treatment and mental health services that they need and deserve.

Considering that the cost of appropriate substance abuse treatment and mental health services is far cheaper and more effective than dealing with the resulting emergency room visits, potential suicide attempts, violence and incarceration that can result from inadequate treatment, the bill was extremely appropriate.

With strong support from Democrats and Republicans, the legislation passed the Program Review and Investigation Committee 11 – 0, the Insurance Committee 15 – 2, the Connecticut State Senate 35 – 0 and the Connecticut House of Representatives by a vote of 143 – 0.

But then, in an apparent gift to insurance executives, who have been extremely generous to Malloy’s political fundraising efforts, the Governor reversed course and vetoed the bill.

Now, according to House Speaker Brendan Sharkey, the Democratic-controlled legislature will not override any of Gov. Dannel P. Malloy’s vetoes, including the important substance abuse and mental health bill.

The General Assembly’s decision to simply give in and give up the fight to ensure a better and fairer health insurance system for Connecticut is a sad one.

As the CT Mirror reported at the time Malloy vetoed the bill,

“Gov. Dannel P. Malloy has vetoed a bill opposed by the insurance industry that would have required carriers to report information about the substance abuse treatment they have covered and their networks of mental health and substance abuse treatment providers.

Malloy said he supported the objective of the measure, which was intended to increase the amount of information available about substance abuse treatment and coverage, but was concerned that it could lead to inaccurate information being gathered.

Malloy took issue with that last requirement, saying in his veto message that it’s unusual for state law to require private entities to “report on activities to achieve public policy objectives,” and that he worried about the precedent it could set.

In defense of his veto, Governor Malloy actually said that he is opposed to requiring private entities to “report on activities to achieve public policy objectives.”

Malloy’s statement is absolutely absurd considering that private businesses that are engaged in public purposes MUST regularly “report on activities to achieve public policy objectives.” Just ask the electric companies, the water companies and all the other private entities that serve the public good.

Insurance companies that provide health insurance to Connecticut residents must be held accountable for their actions and the bill Malloy vetoed would have done exactly that.

As Jeffrey Walter, the president of the Rushford Center and an expert on substance abuse treatment, explained in his testimony in favor of the legislation,

“The legislation might not be necessary were it not for the fact that behavioral health is treated differently by the insurance industry than virtually any other health care specialty….care for psychiatric and substance use disorders [are] denied at a rate that far surpasses my other part of the health care system.”

The Connecticut Psychological Association added,

“The provisions…increase transparency related to coverage decisions and complaints, which will facilitate evaluation of the review process, including compliance with federal parity law, which requires equal treatment of medical and behavioral health providers and conditions, as well as network adequacy.”

“Expanding the data that insurers report to the Insurance Department concerning member utilization of services for the treatment of substance use, co-occurring and mental health disorders will provide additional needed clarity to the issues concerning consumer access to treatment for these conditions.”

Malloy was wrong to veto this bill and the Connecticut General Assembly is failing to do its job by refusing to even consider overriding Malloy’s veto.

“Nearly 70 positions at The William W. Backus and Windham hospitals will be eliminated”

“List shows 176 Connecticut layoff notices so far (Norwalk Hour)”

“116 positions will be eliminated as a result of state budget cuts (Danbury News-Times)”

St. Francis Hospital and Medical Center is reducing the staff at its pediatric and adolescent clinic

“The layoffs announced Monday are the second round in the last seven months. In November, Hartford HealthCare laid off 179 employees, including 10 each at Backus and Windham.”

So why are people being thrown out of their jobs when access to quality healthcare is more important than ever?

Malloy’s “provider tax” budget gimmick is a major factor.

When Malloy proposed his $1.5 billion tax increase in 2011, the plan also included an additional $350 million “provider tax” on hospitals. Malloy claimed it wasn’t really a tax because the hospitals would get all the money back and the federal government would reimburse the state for a portion of that money.

Of course, to the self-pay patient, it was a tax.

And to the health insurance company it was yet another cost to be passed on to the people who pay for health insurance.

But the General Assembly approved Malloy’s plan anyway.

As part of his state budget coverage, CT Mirror’s Keith Phaneuf wrote last year,

“And then there’s really bad news: Gov. Dannel P. Malloy would cut their state funding by one-fifth over the next two years.

Put it all together, hospitals say, and at best, they will cut jobs and services. At worst, some will shut their doors. And facilities in the state’s poor northeastern corner say they are particularly at risk.”

The fact is that while the Malloy administration did pay the hospitals back the first year, his budget REDUCED the amount Connecticut hospitals received by about $27 million in the second year, $134 million the third year and $269 million in this year’s budget.

Overall, as a result of Governor Malloy’s budget strategies, while hospitals are being paid for additional Medicaid services, the State of Connecticut has reduced funding for its 32 chronic care hospitals by about $400 million dollars in the last two years alone.

The massive number of layoffs are proof that the “chickens are coming home to roost.”

And, none of this is a surprise to Malloy and the legislature.

As the Vice President of the Connecticut Hospital Association said,

“In short, what started 18 months ago as a scheme to help balance the state budget … has been converted to an unadulterated tax on hospitals…It’s one thing not to help hospitals, it’s something completely different when you harm hospitals. “Taking patient care revenue to balance the state budget is just plain wrong.”

The state cuts to hospitals garnered some notoriety last spring when Malloy lost his temper on the WNPR radio show, “Where We Live,”

The CT Mirror reported at the time,

When Malloy appeared on May 6 on WNPR’s public affairs show “Where We Live,” he responded quickly when host John Dankosky asked about the hospital funding reductions the governor’s own budget staff wrote about in his budget.

“Let me stop you right there,” Malloy told Dankosky about four minutes into the program. “There aren’t cuts to hospitals.”

The administration insists that while the hospitals lose $400 million in tax reimbursements, they will make it back. But to do so, hospitals will have to treat thousands more poor patients covered through Medicaid.

While the overall policy is rather complex, the impact has been pretty simple. The way Malloy has handled the state budget is a primary factor behind the hospital layoffs that are taking place across the state.

The families that are being devastated by these hospital layoffs and the communities being impacted by reduced levels of services should tell Governor Malloy that at the very least, he must take responsibility for the actions he took that are now leading to many healthcare workers losing their jobs.

Pick up any newspaper and you are bound to see at least one story about the impact of budget cuts and another about how state governments are giving money away to private companies in an attempt to convince them to create or retain jobs.

It is quite a commentary about our times. A lack of adequate funding means people who work for schools, hospitals and nonprofit providers of human services are or will be losing their jobs, while taxpayer continue to provide the money that is being used to try and persuade businesses to pledge that they will create or keep private sector jobs.

True, it may not be the notoriety that we want, but you certainly can’t say that Connecticut hasn’t become the epitome of this paradox.

The first post reported on a recent Hartford Courant commentary piece by a father lamenting Governor Malloy’s cut to essential programs that help Connecticut’s developmentally disabled residents while the second was about the Governor’s visit to a brew pub in Stamford to celebrate a $100,000 taxpayer-funded grant that the Malloy Administration was giving to help the brew pub expand.

The two stories served to enlighten readers about the reality of our times or the juxtaposition between an era where we are cutting vital services while providing private companies with what some would call economic development incentives and what others would refer to as corporate welfare.

What I failed to report was that, in addition to the brew pub, Governor Malloy and his Commissioner of the Department of Economic and Community Development (DECD), Catherine Smith, were actually visiting three other companies around the state that day. All four of the companies were receiving funds thanks to the State’s Small Business Express Program (EXP).

Over the past eighteen months, the Small Business Express Program has given out more than $80 million. According to state officials, the program has helped “create and retain more than 7,600 jobs.” The Legislature will soon be voting to give the Governor an additional $60 million for this program.

In addition to Stamford’s Half Full Brewery, Malloy was visiting Atlantic Canvas and Awning (a company that received a loan of $50,000 and a matching grant of $10,000); Automotive Core Recycling (a company that recycles and sells catalytic converters and other auto parts and received a $250,000 loan) and Katalina’s (a cup cake bakery that received a loan of $30,000 to add equipment and furnishings to their new retail shop).

According to the Department of Economic and Community Development, the $50,000 loan and $10,000 grant “support the creation of three new jobs and retained four,” the $250,000 loan translated into one new position and retained 8 jobs, while the $30,000 loan to the bakery “created one full time job and retained two full time and two part time jobs.”

The Governor’s press release that day announced that the Small Business Express Program has already created or retained more than 1400 jobs in 2013.

Meanwhile that distraught and frustrated father, along with the others who care for Connecticut’s developmentally disabled, try to cope with Governor Malloy’s $6 million cut to employment and day service programs.

Actually, that $6 million cut was part of a much bigger list of cuts Governor Malloy ordered last November 28, 2012. That day, back in November, Governor Malloy announced $170 million in budget rescissions.

The press release didn’t actually quote Governor Malloy. Instead the task of explaining the cuts was left to Ben Barnes, Malloy’s budget director. Barnes wrote, “Many of these cuts are very difficult to make, especially now when so many residents continue to struggle in a tough economy, But as painful as they are, cuts are necessary to keep this year’s budget in balance. State government needs to live within its means.”

The November list included a wide variety of reductions including a $53,000 cut to the Division of Criminal Justice’s Shooting Task Force; a $200,000 cut to the Jobs First Employment Service Program, a $488,000 cut to the state’s Environmental Quality Program; a $335,000 cut to the Department of Health’s Community Health Services Program and $41,000 cut to their Genetic Diseases Program; a $433,000 cut to the state’s Community Mental Health Centers, a $2.3 million cut to home care services that keep people out of more expensive nursing homes and hospitals and the list goes on and on.

More recently, the state budget plan that Governor Malloy proposed a month ago continued those cuts. In fact, his new budget makes even deeper cuts to a variety of vital and essential services.

So how is it possible that a Governor would be instituting record budget cuts while giving away record amounts of taxpayer funds to private businesses?

Truth be told, it is the difference between how the State operating budget works compared to the way the State Capital or Bond budget functions.

Even in the desperate times, the Capital budget continues to pump out cash.

The State’s operating budget is paid for with tax dollars. The State’s Capital Budget is funded via the state’s credit card.

Because we are borrowing the money and then paying the amount (plus interest) back over twenty years, the argument is that cutting the Capital Budget won’t help to balance this year’s operating budget. This year’s operating budget is still facing a $135 million plus deficit despite the terrible cuts instituted by the Governor and the additional cuts approved by the General Assembly.

Although Connecticut already has the highest per capita debt burden in the nation, since the word “deficit” applies to the operating budget and not the Capital Budget, we end up with a situation in which vital services are cut at the same time money is being handed out.

In fact, if Governor Malloy gets his way, we’ll see more cuts to essential services and more layoffs of hospital and human service workers in the coming months, and at the same time, the General Assembly will be allocating even more money for the Governor to hand out to the private sector.

There are a lot of crazy, irresponsible and down-right mean things in Governor Malloy’s budget proposal, but his plan to totally eliminate Connecticut’s contribution to the retired teachers’ health insurance fund may very well take the cake.

For nearly sixty years, the State of Connecticut has been helping retired teachers acquire health insurance.

Prior to 1986, active teachers did not pay into the Federal Medicare system, so when they retired, they didn’t qualify for Medicare, the primary health insurance system for older Americans.

Furthermore, since teacher salaries were historically so low prior to the educational enhancement act of 1986, older teachers were retiring with very small pensions. With no Medicare and limited incomes, few could afford the most basic level of health insurance coverage, without some type of subsidy.

For nearly 4 decades, the State of Connecticut utilized a variety of different mechanisms to help these older, retired teachers get some health insurance. In 1991 it settled on the creation of the Retired Teachers Health Insurance Fund.

To fund the program, active teachers contribute 1.2 percent of their income into the health fund. This year that amounts to about $45 million.

The premiums that retired teachers pay for their insurance brings in about $37 million.

And state law required that the State of Connecticut contribute 33 percent of the cost of a Medicare supplement plan into the Insurance Fund.

Together these funds were used to help retired teachers get health insurance through the Teacher’s Retirement Board or through their last employing board of education. The subsidy isn’t much, only $110 per month, and despite the massive increase in health insurance premium costs, the subsidy hasn’t been increased since 2000. The Teachers Retirement Board has determined that the $110 subsidy “now covers “on average” only 14% of the monthly premium for the retiree, further eroding the value of the retiree’s pension.

But as bad as things have become, even the $110 helped a little as these retired teachers were forced to shell out of their own pockets an additional $500 to $900 a month to buy insurance through their former boards of education.

Meanwhile, some towns are engaging in a whole separate effort to change the rules and unfairly force teachers off their municipal plans, but I’ll cover that growing problem under a separate post.

In any case, for good or for bad, the present system has been functioning fairly well.

And then to balance the state budget in Fiscal year 2010 and 2011, Governor Rell and the Democrats decided to insert language that allowed the state to forgo any contribution for two years. The lack of funding created a situation that began to derail the financial stability of the Retired Teachers Health Insurance Fund.

When Governor Malloy was sworn in, rather than recommit the state to the appropriate level of funding, he proposed shifting the burden onto the backs of the retired teachers. The Legislature rightfully rejected the move, but “compromised” by agreeing to only allocate 25% of the value of a Medicare supplement plan rather than the 33% required by the law.

While the state did deposit $35 million in Fiscal Year 2012 and $18 million in Fiscal Year 2013, by refusing to deposit the appropriate amount the Fund was, yet again, undermined.

And then came this year…

Malloy went for broke and proposed simply making no payments what-so-ever into the fund.

IrresponsibleOutrageousInappropriateIncredibleBreathtaking

This Governor, who ran on a platform of fiscal responsibility, proposing that the state simply forgo putting $70 million into the Retired Teachers Health Insurance Fund.

Governor Malloy issued a call for a Special Session of the Connecticut General Assembly to deal with the growing state deficit.

That Session is taking place today.

The State Senate and State House or Representatives convened at 10:00 am and then recessed until 4:30 pm so that elected officials could attend funerals and memorial services resulting from the Newtown Elementary School Massacre.

When they reconvene at 4:30 pm, a joint session of the Legislature will be held so Governor Malloy and Legislators can hold their own memorial service in honor of those who lost their lives in Newtown.

And then the legislature is scheduled to debate and vote on a plan to resolve Connecticut’s $415 million budget deficit.

Governor Malloy has already made $123 million in cuts, mostly to social services and Connecticut’s public colleges and universities. The cuts to UConn, Connecticut State University and the Community Colleges come on top of Malloy’s previous cuts to our public institutions of higher education, which were already the deepest in Connecticut history.

As the Hartford Courant noted in today’s edition,” Legislative leaders declined Tuesday to discuss the specifics of the budget deal, which was hammered out in a series of meetings last week

However, as the CTMirror is reporting, the non-partisan Connecticut Center for Economic Analysis, located at the University of Connecticut, has issues a report today noting that balancing the state budget exclusively with spending cuts could be the final straw that breaks Connecticut’s economic back, pushing it back into recession.

In a report about next year’s $1.2 billion deficit, the economists said that an “all-cut” budget could “trigger as many as 25,000 annual job losses between the public and private sectors combined.”

So, when our elected officials vote tonight, what type of budget reduction plan will they be voting on? Will it be all cuts or a combination of cuts and taxes? What programs are being cut and what taxes are being increased?

Will our legislators be voting to cut essential social services?

Will our legislators be voting to ensure that the wealthy finally start paying their fair share in state income taxes?

Will our legislators be voting to borrow money to pay for current expenses?

Will our legislators be voting on a plan that will mean higher local property taxes?

There have been no public hearings on this plan.

The discussions have been held behind closed doors.

According to the House Republican leader, Representative Cafero, the “tentative” agreement, is “truly a compromise.”

After speaking with legislators, the CTNewsjunkie explained that the compromise “means Democrats and Republicans didn’t get everything they wanted as they attempted to reach a deal on how to close the budget deficit estimated at $365 million to $415 million.”

“It relies more heavily on spending cuts than we would have liked,” the Speaker of the House told reporters as he left the closed-door caucus where Democratic legislators were briefed on this secret plan.

The Hartford Courant added, “Lawmakers are set to vote today on a plan to close a state budget deficit by scrapping longevity bonuses for nonunion state workers in favor of a new compensation formula and cutting payments to hospitals, among other measures.”

The state does provide hospitals with funds to help off-set care that the hospitals provide to non-insured people. However, massive cuts to hospitals would definitely threaten the level of services at some hospitals and lead to a major shift in costs from those state grants to those who are insured. That cost shift will translate into higher health insurance premiums for those of us who have insurance. So is the legislature’s vote going to push our health insurance premiums higher? Is that fair?

And cutting out longevity bonuses for non-union workers is certainly understandable, but it solves about 1% of the $400 plus million state budget deficit.

So where are cuts coming from?

While action is definitely needed to bring Connecticut’s budget deficit under control, passing a “plan” that has never seen the light of day is not only incredibly inappropriate, but it is down-right unfair and undemocratic.

This plan, if it looks like the “road-map” proposed by Governor Malloy, will cut deeply into some of the most vital and essential services the state of Connecticut provides our most vulnerable citizens.

Malloy’s budget road map looked like something that would be put out by a Republican governor, not a solution based on the values and ideals of the Democratic Party.

Perhaps the secret plan will be fantastic.

Perhaps the secret plan will be a disaster.

But voting on the plan without telling the media and the people what is in it is bad news for Connecticut.

“Marley was dead: to begin with. There is no doubt whatever about that. The register of his burial was signed by the clergyman, the clerk, the undertaker, and the chief mourner…You will therefore permit me to repeat, emphatically, that Marley was as dead as a door-nail…This must be distinctly understood…”

When Governor Malloy’s new Health Care Cabinet met earlier this week, Lt. Gov. Nancy Wyman, who had helped to lead the SustiNet effort and was once one of its greatest champions, took great pains to ensure that no one – no one – thought that SustiNet was anything but dead.

Wyman proclaimed that “SustiNets not around anymore, there is no SustiNet.”

In fact, Wyman and State Comptroller Kevin Lembo, who served as Connecticut’s Health Care Advocate at the time, were the co-chairs of the SustiNet Health Partnership Board of Directors that created SustiNet.

Their board worked for more than a year and a half developing what was recognized as a profound step forward in the battle to provide greater access to affordable, high quality health care in Connecticut.

When the SustiNet Plan was finalized last December, Lembo said that “this report provides the General Assembly with a roadmap for reform – and propels Connecticut to the forefront in addressing a nationwide health care and financial crisis.”

This extraordinary victory did not come easily.

The legislation creating the SustiNet Board of Directors and laying out the process for developing Connecticut’s healthcare reform plan was vetoed by Gov. M. Jodi Rell in 2009.

The Democratic Legislature took the unprecedented action of overriding that veto and setting in to motion the steps that would eventual lead to the SustiNet plan.

Last December, on the day the SustiNet Board was adopting its final report, a rally was held in Hartford.

Dan Malloy, then the Governor-Elect, spoke at the rally. As he did during his campaign for Governor he credited his mother for his lasting commitment to universal health care.

Speaking to the crowd, Malloy said that “it was through her eyes and her advocacy that I think much of my commitment to making sure that all of our neighbors have access to quality health care really arouse.”

Surrounded by health care reform proponents and religious leaders, Malloy pointed out that SustiNet represented Connecticut’s move toward universal health care. The Governor to be added “I’m not sure we’re at the top of the mountain, where we see the promise land but we know the promise land exists or at least a substantial portion of that which is necessary to provide the promise land is just around the corner,”

Speaker of the House Chris Donovan, another leading voice in the battle for SustiNet also spoke at the rally calling it “an impressive sight” and pointing out how much had changed over the last few years.

Pointing to the next governor, the next lieutenant governor and all the clergy and said “I remember a couple years ago when the clergy wanted to meet with the governor and the governor then refused,”

Now, 10 months later, SustiNet is dead….

Dead as a doornail.

At this week’s Health Care Cabinet Meeting, Dan Malloy’s special advisor on health reform, Jeannette DeJesús worked to put all that in the past saying “There’s a lot of new things happening that we need to consider, there are lots of new opportunities, and there are lots of people who want to play that have not participated in the past. Our goal is to really be inclusive at every turn.”

New things, new opportunities, lots of people who want to play a role?

But despite the thousands of hours spent developing the SustiNet plan, there was no discussion about what elements of the old plan were so terrible that the SustiNet plan needed to be trashed.

Was it the effort to leverage Connecticut’s tremendous buying power to lower healthcare premiums for people whose healthcare is funded by taxpayers?

Was it the effort to create a system in which municipalities, non-profit organizations and small businesses could buy healthcare at a lower cost?

Was it the focus on lowering costs for everyone by making greater use of electronic medical records, preventative treatment initiatives or promoting cutting edge care in patient homes?

Or was it the creation of a “public option”, which was scheduled to begin in 2014 and would have provided health care insurance for the tens of thousands of Connecticut’s uninsured residents- an option that would have be financed by premium payments and federal tax credits and would not have required significant state subsidies.

Everyone in the room knew, but few would say, that part of the problem was that the SustiNet plan had gotten caught up in the recent Malloy/SEBAC agreement when, as a result of poor communication by both the state unions and the Malloy Administration, opponents of the concession deal interpreted the proposed health care changes as part of a secret plan to use SustiNet to undermine the state employee’s
health care plan.

But of course, that problem could have easily been resolved.

What could not be easily resolved was the strong opposition from Connecticut’s health care industry.

And since that opposition was very real and politically significant, the Governor’s new Health Care Cabinet did what it had to do and simply skipped over the true reason SustiNet was killed.

In the end the real problem was that here, in what was once the “Insurance Capital of the World”, if the SustiNet System worked as it was designed to do then health care premiums would drop and if health care premiums dropped, insurance company profits might drop as well.

In a year when Dan Malloy gave Cigna Insurance company almost $50 million in public funds to “move” its corporate headquarters back to Connecticut and create at least 250 jobs, whacking the insurance industry’s bottom line was hardly the message some wanted to send.

And equally important was the fact that SustiNet would allow a variety of entities to buy their health insurance through one of the state’s pools or plans. Many chambers of commerce, especially the Connecticut Business and Industry Association, make their money by selling insurance to their members.

Giving small businesses another option for getting insurance, even if it mean cheaper insurance for businesses and their employees would have had a devastating impact on the ability of business groups to fund their activities.

So yes, SustiNet is Dead. It was killed by some of the very people who helped create it in the first place.